Oregon Legislative Update

Oregon Legislative Update

Our April 19, 2012 Compliance Memorandum discussed Oregon Senate Bill 1552, effective April 11, 2012, which enacted foreclosure avoidance measure laws.  The Oregon legislature recently amended and repealed certain provisions discussed in the April 19, 2012 Compliance Memorandum and amended its laws governing trust deeds.  The provisions addressing resolution conference discussed below replace the prior mediation provisions.  Such provisions apply to requests for resolution conferences that a lender or borrower submits, to notices of sale that a trustee or lender or an agent of the trustee or lender sends, and to suits to foreclose residential trust deeds that commence on or after June 4, 2013.

OREGON SENATE BILL 558

 

Foreclosure Avoidance Measures

 

The Foreclosure Avoidance Mediation Fund has been renamed the Foreclosure Avoidance Fund.

 

 

“Facilitator” means a person that a service provider selects to conduct a resolution conference.

 

 

“Housing counselor” means a counselor employed by a nonprofit housing counseling agency that the Housing and Community Services Department or a successor state agency approves.

 

 

“Resolution conference” means a meeting at which a borrower and a lender attempt to negotiate and agree upon a foreclosure avoidance measure.

 

 

“Service provider” means a person that the Attorney General appoints to coordinate a program to implement the below provisions with regard to a resolution conference.

 

 

A lender that intends to foreclose a residential trust deed must first request a resolution conference with the borrower before the lender or the trustee files a notice of default or foreclosure suit.  The requirement to request or participate in a resolution conference with a borrower does not apply to a lender if the lender submits to the Attorney General a sworn affidavit that states that during the preceding calendar year the lender did not commence or cause an affiliate, subsidiary, or agent of the lender to commence more than 175 actions to foreclose a residential trust deed by advertisement and sale or by suit.  A lender that is a trustee must include as part of the total number of foreclosure actions that the lender commenced in the previous calendar year all foreclosure actions that the lender commenced by advertisement and sale or by suit in the lender’s capacity as a trustee.  A lender that intends to claim an exemption must submit the affidavit in a form and with the contents the Attorney General specifies by rule either:

  • Not later than January 31 in any calendar year in which the lender intends to claim the exemption for the remainder of the calendar year; or
  • At the time the lender files a notice of default or brings a suit to foreclose.

 

Such an exemption expires at the end of the calendar year in which the lender claims the exemption.  A lender that claims an exemption is not exempt from the requirement of mailing a notice to the borrower informing the borrower that he or she is not eligible for any foreclosure avoidance measure as described below.

 

 

The lender must request a resolution conference through the service provider.  The lender must submit the request to the service provider electronically, by facsimile, or by mail and must submit a processing fee in an amount and in a manner that the Attorney General specifies by rule.  The service provider must pay to the Attorney General, for deposit into the Foreclosure Avoidance Fund (the “Fund”), such moneys the service provider receives from the lender.  The lender’s request for a resolution conference must identify the residential trust deed that the lender intends to foreclose and list the name, title, address, telephone number, and other available contact information for:

  • The lender;
  • Any agent of the lender that will attend the resolution conference;
  • Any person other than the lender or agent of the lender that will receive, on the lender’s behalf, notices or other communications related to the resolution conference; and
  • The borrower.

 

If a lender does not request a resolution conference, a borrower may request a resolution conference with the lender if:

  • The lender or the trustee has not filed a notice of default or the lender has not commenced a foreclosure suit; and
  • The borrower first obtains from a housing counselor a certification in writing that the borrower is more than 30 days in default on the obligation that the residential trust deed secures or, if the borrower is not in default, that the borrower has a financial hardship that the housing counselor believes may qualify the borrower for a foreclosure avoidance measure.

 

A borrower must request a resolution conference through the service provider.  The borrower must submit the request to the service provider electronically, by facsimile, or by mail and must enclose with the request the written certification the housing counselor provides.  The Attorney General by rule will specify the information that the request must include.

 

 

A lender that receives a notice from a service provider after the service provider receives a request from a borrower is subject to the below provisions.  The above provisions do not apply to a lender that submitted an affidavit and is exempt.  A lender that submitted an affidavit for exemption may, without waiving the exemption the lender claimed in the affidavit, request a resolution conference with a borrower.  The lender must submit a request for a resolution conference in accordance with the requirements provided above, except that the lender need not pay a processing fee.

 

 

Within 10 days after a service provider receives a request for a resolution conference, the service provider must schedule the resolution conference and mail a notice to the lender and to the borrower.  The service provider must schedule the resolution conference to occur within 75 days after the date on which the service provider sends the notice.  A notice must:

  • Specify a range of dates within which and a location at which the resolution conference will occur;
  • State that the lender and the borrower each must pay the facilitator’s fees for the resolution conference;
  • List and describe the documents that the lender and the borrower must submit to the service provider;
  • State that the borrower must consult a housing counselor before attending the resolution conference unless the borrower notifies the service provider that the borrower could not obtain an appointment with a housing counselor before the date of the resolution conference;
  • State that the borrower may have an attorney or housing counselor present to represent the borrower at the resolution conference, and that the attorney or housing counselor must attend the resolution conference in person unless there are compelling circumstances that prevent attendance in person; and
  • Include any other information the Attorney General requires by rule.

 

Within 25 days after the date on which the service provider sends the notice:

  • The borrower must pay a fee to the service provider in an amount and in a manner that the Attorney General specifies by rule.  The borrower’s fee may not exceed $200.  Within 5 days after receiving the fee from the borrower, the service provider must send a written notice to the borrower and the lender that specifies the date, time, and location of the resolution conference.
  • The service provider must pay to the Attorney General, for deposit into the Fund, moneys the service provider receives from the borrower.
  • The borrower must submit to the service provider:
    • Information about the borrower’s income, expenses, debts, and other obligations;
    • A description of the borrower’s financial hardship, if any;
    • Documents that verify the borrower’s income; and
    • Any other information the Attorney General requires by rule.

 

The borrower must consult a housing counselor before attending the resolution conference unless the borrower cannot obtain an appointment with a housing counselor before the date of the resolution conference.

 

 

Within 25 days after the service provider makes the information the borrower submitted to the service provider available to the lender, the lender must:

  • Pay a fee to the service provider in an amount not more than $500 and in a manner that the Attorney General specifies by rule.  The service provider must pay to the Attorney General, for deposit into the Fund, moneys the service provider receives from the lender.
  • Submit to the service provider:
    • Copies of:
      • The residential trust deed; and
      • The promissory note that is evidence of the obligation that the residential trust deed secures and that the lender or lender’s agent certifies is a true copy;
    • The name and address of the person that owns the obligation that is secured by the residential trust deed;
    • A record of the borrower’s payment history for the longer of the preceding 12 months or since the lender last deemed the borrower current on the obligation;
    • An itemized statement that shows:
      • The amount the borrower owes on the obligation, itemized to reflect the principal, interest, fees, charges, and any other amounts included within the obligation; and
      • The amount the borrower must pay to cure the borrower’s default;
    • A document that identifies:
      • The input value for each net present value model that the lender or the lender’s agent uses; and
      • The output values that each net present value model produces;
    • The appraisal or price opinion the lender relied on most recently to determine the value of the property that is the subject of the residential trust deed;
    • The portion of any pooling agreement, servicing agreement, or other agreement that the lender cites as a limitation or prohibition on modifying the terms of the obligation, together with a statement that describes the extent to which the lender sought to have the limitation or prohibition waived;
    • A description of any additional documents the lender requires to evaluate the borrower’s eligibility for a foreclosure avoidance measure; and
    • Any other information the Attorney General requires by rule.

 

The service provider may postpone or reschedule a resolution conference scheduled by the service provider if:

  • The lender and the borrower agree to a new date;
  • The lender or the borrower requests a new date in writing that is not more than 30 days after the original date scheduled for the resolution conference and can show good cause for the request; or
  • The lender does not pay the required fee to the service provider by the date the fee is due.  The service provider may wait until the lender has paid the fee before rescheduling the resolution conference.

 

The service provider must cancel a resolution conference that the service provider scheduled if the borrower does not pay the required fee by the date the fee is due.

 

 

A resolution conference is not subject to the Mediation and Arbitration provisions of Oregon law and does not preclude mediation that a court or another provision of law requires.

 

 

A facilitator is not subject to a subpoena and cannot be compelled to testify in any proceeding that is related to a resolution conference, other than a proceeding against a facilitator for an act or omission for which the facilitator may be liable.  A facilitator is not civilly liable for any act or omission done or made while engaged in efforts to assist or facilitate a resolution conference unless the facilitator acted or made an omission in bad faith, with malicious intent, in a manner that exhibited a willful or wanton disregard of the rights, safety, or property of another person.  The limitations on liability apply to the officers, directors, employees, and agents of the service provider and any dispute resolution program engaged in facilitating resolution conferences.  Information that a lender or borrower submits for the resolution conference is not subject to the Records provisions of Oregon law.

 

 

A lender that is required to request a resolution conference with a borrower must attend and participate in the resolution conference in person.  A lender may send an agent to the resolution conference if the agent attends the resolution conference in person and has complete authority to negotiate on the lender’s behalf and commit the lender to a foreclosure avoidance measure or, if the agent who attends the resolution conference in person does not have complete authority, the lender also requires the participation, by remote communication, of a person who does have complete authority to negotiate on the lender’s behalf and commit the lender to a foreclosure avoidance measure.

 

 

A borrower may have an attorney or a housing counselor, or both, present to represent the borrower at the resolution conference, but the borrower, or any individual that a court appoints to act on the borrower’s behalf, must attend the resolution conference in person unless there are compelling circumstances that prevent attendance in person.

 

 

If the lender agrees to a foreclosure avoidance measure with the borrower, the lender and the borrower must sign a written document that sets forth the terms of the foreclosure avoidance measure.

 

 

A facilitator may suspend or postpone a resolution conference after the conference has begun:

  • One time only on the facilitator’s initiative or in response to a request for a suspension or postponement from the lender or the borrower;
  • After a suspension or postponement described above, only if the lender and the borrower agree to the additional suspension or postponement; or
  • If the lender or the borrower needs additional time to write or sign a document that sets forth the terms of a foreclosure avoidance measure.

 

After the resolution conference concludes, the facilitator must submit to the service provider a written report that:

  • Lists the date or dates on which the resolution conference occurred;
  • Lists the name, title, address, telephone number, and other available contact information for each person that participated in the resolution conference, noting whether the person attended the resolution conference or participated by remote communication;
  • States whether the lender or the agent of the lender who attended the resolution conference had complete authority to negotiate and commit to a foreclosure avoidance measure;
  • Summarizes the terms of the foreclosure avoidance measure to which the lender and the borrower agreed or notes that the lender and the borrower did not agree to a foreclosure avoidance measure; and
  • Provides any other information the Attorney General requires by rule.

 

The service provider must issue, within 5 days after receiving a report from a facilitator, a certificate of compliance to a lender that:

  • Complied with the requirements for participation in a resolution conference;
  • Submitted the materials for a resolution conference to the service provider;
  • Appeared in person at, or sent  an agent in person to, the resolution conference with complete authority to negotiate on the lender’s behalf and commit the lender to a foreclosure avoidance measure or, if the lender or agent did not have complete authority, required the participation by remote communication of a person with complete authority to negotiate on the lender’s behalf and commit the lender to a foreclosure avoidance measure; and
  • Signed a document that sets forth the terms of any foreclosure avoidance measure to which the lender and the borrower agreed.

 

A certificate of compliance expires one year after the date on which the service provider issues it.

 

 

The service provider will notify a lender that failed to meet a requirement that the service provider will not issue a certificate of compliance.  The service provider will provide a copy of such notice to the borrower and the Attorney General.

 

 

If a service provider cancels a resolution conference, the service provider will issue a certificate of compliance to the lender within 5 days after canceling the resolution conference.

 

 

The Attorney General will:

  • Appoint and enter into an agreement with a service provider to coordinate and manage a program to implement the above requirements.
  • Enter into an agreement for information technology goods or services.
  • Receive exemption affidavits and notices to borrowers informing borrowers that they are not eligible for any foreclosure avoidance measure.
  • Specify the amount a lender must pay to the service provider and the amount that the borrower must pay to the service provider.
  • Prescribe qualifications, training, and experience requirements for facilitators that conduct or assist resolution conferences.
  • Specify procedures and guidelines for conducting a resolution conference.
  • Adopt additional rules to implement the above provisions.  The Attorney General is not subject to the Public Contracting provisions of Oregon law in appointing a service provider or entering into agreements with the service provider.

 

Violations of the above provisions by a lender is an unlawful practice and is subject to enforcement under the Oregon unlawful trade practice law.

 

 

Whether or not a lender participates in resolution conference, if the lender determines that a borrower of a residential trust deed has not complied with the terms of a foreclosure avoidance measure to which the borrower has agreed, the lender must mail a written notice to the borrower within 10 days after making the determination (previously at least 30 days before the date specified for the trustee sale, the lender was required to notify the borrower in writing of the lender’s determination).

 

 

The notice must in plain language explain the basis for the determination.  The notice and any information in the notice are not subject to disclosure under the Records provisions of Oregon law.  The lender does not have an affirmative duty to determine if a borrower is eligible for a foreclosure avoidance measure.

 

 

At least 5 (previously 20) days before the trustee sells the property that is subject to foreclosure (previously the trustee’s sale date), the lender must record in the mortgage records in the county where the property is located an affidavit stating that the lender has complied with all of the requirements.  The lender need no longer mail a copy of the affidavit to the Department of Justice.

 

 

A borrower may bring an action against a lender in a circuit court in Oregon to recover damages against a lender for failing to comply with the notice requirements within 1 year (previously 2 years) of the date the lender should have complied.

 

Trust Deeds

 

In addition to the prior requirements, a trustee may not foreclose a trust deed by advertisement and sale unless the lender has filed for recording in the official records of the county or counties in which the property that is subject to the residential trust deed is located:

  • A valid and unexpired certificate of compliance that a service provider issued to the lender; or
  • A copy of the affidavit with which the lender claimed an exemption.

 

A complaint in a suit to foreclose a residential trust deed must include as an attachment a true copy of:

  • A valid and unexpired certificate of compliance that a service provider issued to a lender;
  • The affidavit with which the lender claimed an exemption, provided that the exemption has not expired; or
  • The notice a lender receives from a service provider that the lender has not met the requirements for a resolution conference.

 

A court on the court’s own motion or in response to a motion from a defendant may dismiss without prejudice a suit that a person brings to foreclose a residential trust deed, or may stay proceedings on the suit, if the person:

  • Fails to file with the court the certificate of compliance or the exemption affidavit; or
  • Files with the court the notice a lender receives from a service provider that the lender has not met the requirements for a resolution conference.

 

The court may release a stay the court granted if the person files with the court the certificate of compliance or the exemption affidavit.

 

 

The court may award a defendant that prevails on its motion to dismiss reasonable costs and attorney fees associated with bringing the motion and any other relief the court deems proper.